January 27th is the date for the first of two week-long visits to Portugal this year by a team from the Troika of lenders that bailed out the country in a financial move that at least one of the three since has regretted.
There has been a change of government since the last visit which resulted in a report that accused the Passos Coelho administration of slacking off in the run up to last October’s election.
The country remains under Troika surveillance until at least 75% of the bail-out loan has been paid back.
Repayments were going rather well under the financial mangement of Maria Luís Albuquerque, former Finance Minister, who simply borrowed billions at lower interest rates than the Troika loans and made the switch.
Crowing about ‘paying off the Troika loans’ made good headlines but were not really helpful as the country remains seriously indebted.
The International Monetary Fund's Christine Lagarde said in December 2015 that Portugal’s debt should have been restructured and that really, the IMF should not have lent the money in the first place, shutting its eyes as it did to the potential problems of Portugal taking on so much bail-out debt.
The inbound Troika team already has issued 18 point for discussion, none of which make happy reading.
The financiers cite bottlenecks in business investment in Portugal, restrictive rules on redundancies and various questions over taxes, among others in a list that they expect to go through point by point over a full week, starting on January 27th.
The Troika will of course be talking to the new PM António Costa, who has developed a habit of reversing some of the austerity measures imposed during the rescue period, as is his right.
The Troika already has been moaning that Portugal has started to reverse or cancel some of its austerity measures but the country is fed up with working and being taxed merely to pay the Troika loans with no visible improvement in social services, infrastructure or employment rates.
"It remains difficult to lay off workers, wage rates remain centralised due to collective bargaining, the bureaucracy of commercial licenses is labyrinthine, qualifications are given to inadequate people, taxes favour the use of debt to the detriment of capital in the form of shares, the rules in force in the port sector and the retail industry, and retail bars the entry of new competitors..." the list goes on, but the Troika in effect is powerless as it can not call in its loans.
It is the same old stuff which Passos Coelho battled on with but failed to make sufficient headway as, at the end of the day he is a politician with a limited shelf life and wanted to be re-elected.
The Troika may also get around to mentioning the disastrous effects that the Bank of Portugal governor has had on the country’s international credibilitym Carlos Costa's latest effort being the cack-handed rescue of Banif which will cost the taxpayer another 4 billion euros by the time his scheme unravels.
International observers concur that some of the Bank of Portugal’s actions have been immoral, illegal and detrimental to Portugal’s international standing with arbitrary edicts disadvantaging one class of creditor over another – anathema to investors looking at putting their funds in Portugal.
The Troika has spotted that the pathetic attempts to improve the country's municipalities, which the Troika considers as obsolete in the way they treat business, have led to little or no progress being made.
In addition to these discussion points, there will be an analysis of Portugal’s public accounts, focused on the excessive deficit and excessive debt as both are considered unsustainable, a situation that was entirely predictable when they wrote out the cheques.
